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Monday, June 8, 2009

CapLand Launches 5th Raffles City In China - In Ningbo

Source : The Straits Times, June 08 2009

CapitaLand growth strategy is emboldened by the China recovery story.

NINGBO (CHINA): CapitaLand's chief executive Liew Mun Leong does not just believe in the China recovery story - he says the growth strategy for the property development group is also 'emboldened by it'.

-- PHOTO: CAPITALAND.

The plan is to grow its China operations' contribution to group assets from 26 per cent now to between 40 per cent and 45 per cent in the next few years, he said at the launch of the group's fifth Raffles City-brand development in China last Saturday. Prime Minister Lee Hsien Loong was also at the launch.

Mr Liew told The Straits Times that China's growth is leading the world because of its response to the crisis; its 4 trillion yuan (S$848 billion) stimulus plan was quick and effective.

'Before China was really affected by the global crisis, it had already recovered,' he quipped.

To illustrate the point, Mr Lim Ming Yan, chief executive of CapitaLand China Holdings, said: 'Retail sales in China are still growing. They grew 15 per cent in the last quarter compared to the same period last year. People are still spending.'

This is true from Beijing to Shanghai, and even Ningbo, an international port city about 150km south of Shanghai, on the edge of Hangzhou Bay, he observed.

Raffles City Ningbo is CapitaLand's fifth Raffles City-brand development in China, after Shanghai, Beijing, Chengdu and Hangzhou. The integrated development will comprise a 50,000 sq m mall, a 30,000 sq m Grade A office tower and a 20,000 sq m tower for serviced apartments.

Raffles City Ningbo, to be completed by 2012, will have similar retail offerings as the Raffles City malls in Beijing and Shanghai.

Ningbo residents are affluent, said Mr Liew, as the city's GDP per capita was US$10,000 (S$14,500) last year, second only to Shanghai's.

Forty per cent of buyers for CapitaLand's Summit Residences development in Ningbo - being built adjacent to Raffles City - paid cash upfront for their properties, said Mr Qian Yiqi, general manager of CapitaLand China's Ningbo Project. The units sold for between 16,000 yuan and 20,000 yuan per sq m.

Over the weekend, CapitaLand also signed strategic cooperation agreements with the Bank of China and the Industrial and Commercial Bank of China to grant its China businesses a credit limit allocation of up to 25 billion yuan.

This is not a credit facility but a framework to facilitate the ease of lending from either bank for ongoing or future projects and 'demonstrates China's commitment to (invite) investments from foreigners', said Mr Liew.

Its China portfolio, including projects under development, is worth S$17.5 billion and comprises 113 projects in 47 cities.

'Projects in China are very huge, (around) S$800 million for one project,' said Mr Liew.

Of his overall China strategy, Mr Liew said Tianjin and Changsha possess 'a lot of opportunities', and that 'residential (developments) are always the lion's share of market opportunities'.

He said: 'In any city, usually you build (the residents) homes first. Then you find them jobs and build them offices. Then when they make money you build them shopping malls.'

He reiterated that the group is always on the lookout to buy distressed assets and turn them around - as it had already done with four residential properties in Beijing in recent years.

The upside of picking up distressed projects is not merely that they are cheaper, he said, but also that they have a quicker turnaround as their plans have already been approved.

He said: 'Not only good projects, even good companies. If they're distressed but good, maybe we'll look at them. Why not?'

As China continues to catch up with the modern global economy, Mr Liew said CapitaLand retains a competitive advantage because 'they're still behind us in terms of finishes'.